The Changing Face of Advertising, Purchasing in a Data Economy

Over the last day or so, I came across news on how American Express (AXP) has expanded its partnership with Foursquare, the location-based social network. Basically, the program will let users who have both an American Express card and a Foursquare account to link these two accounts together and receive special offers from merchants who accept the American Express card. This is an expansion of the pilot program American Express and Foursquare initiated at SxSWi this year. I also talked about the partnership between Starwood (HOT) and Foursquare in a similar way about a month ago (see Bartering Goes Digital: The Rise of Social Currency in the Data Economy), which gave rewards and loyalty points to people who checked in to Starwood properties both physically with their SPG membership and virtually on Foursquare.

Erick Schoenfeld over at TechCrunch did a nice job here covering the deal itself, as well as talking more broadly about the changing landscape we are seeing in the mobile payments arena. One of the things Schoenfeld said in his piece is something I have been thinking about for a while: that the daily deals business needs to be more targeted than it is currently (emphasis, mine):

A Groupon Now deal is directly equivalent to a Foursquare special powered by AmEx in that it is instantly redeemable and the payment can be linked to the offer. Closing this loop is the Holy Grail of digital local commerce. But closing that loop is not enough.

The winner of this race will be the one who can bring enough high-quality deals to mobile consumers, and vice versa. You need both incredible deal density and a huge number of users looking for those deals and redeeming them, all pretty much in realtime. Even Groupon doesn’t have enough deals in place yet or people using its app to make Groupon Now compelling. Neither does Foursquare, which up until now has allowed merchants to put up whatever specials they want.

Notice in such a setting who is missing from the equation: traditional media. Whether it’s TV, newspaper or radio, they’re not relevant in a world where deals are zapped to your phone. No more quarter-page ads in the newspaper. No more decisions about when or where to buy ad time on the radio or TV. It may seem like a no-brainer, but I’m not quite sure people appreciate how profound that is. I’m amazed at how quickly the digitization or “dataization” of content has rendered the infrastructure behind traditional media obsolete. Converting people en masse to using smartphones and the social web is another matter, but the infrastructure is largely in place now.

But I think we can redefine the terms “incredible deal density” and the definition of “huge.” With traditional media, you buy ad space based on print media circulation or air time based on ratings, which are just samples of TV watchers and radio listeners. You buy the ad, cross your fingers, say a couple of Hail Marys or hold a few seances and hope the ads you bought turn into sales. Circulations in the millions are needed in this approach, because the one question you really want answered can't be answered:

How captive is my audience?

With the social mobile web, the game has changed. You don't need your advertising to reach millions, you need it to reach hundreds or thousands at a time. And you can do it at a fraction of the cost of old media outlets. Your audience is captive; you're going right to their phone or mobile device. Indeed, this infographic I saw from GetElastic shows just how ubiquitous smartphone usage is becoming:



Smartphones are used practically everywhere, in a plethora of situations. So if you're a business trying to market yourself and get the attention of consumers in a data economy, how important is it to buy advertising during the prime time viewing hours or rush hour? A lot less so now than ever before.

< Previous

• 1
• 2

Next >

View As One Page

PRINT Post Comments

Follow Us On Twitter